1. Over the past 75 years, the total annual returns on large company common stocks averaged 11.8%, small company stocks averaged 16.6%, long-term government bonds averaged 5.8%, while Treasury Bills averaged 3.7%. What was the average risk premium earned by long-term government bonds and small company stocks, respectively?
D. none of the above.
C. 4.4%; 13.9%
B. 2.1%; 12.9%
A. 1.8%; 11.9%
2. You've observed the following returns on Kelley Corporation's stock over the past five years: –16 percent, 21 percent, 4 percent, 16 percent, and 19 percent. What was the arithmetic average return on the stock over this five-year period? What was the variance of returns over this period? The standard deviation?
C. 8.80%, 0.034056, 18.45%
D. none of the above
B. 11.80%, 0.023570, 15.35%
A. 8.80%, 0.023570, 15.35%